Kindly note that I seek ideas:
I'm in the middle of a deal with a federal institution to supply ICT equipment. Due to the nature of the transaction, these equipment have to be setup prior to delivery and the supplier insists that they must get full payment before they release the kits as they can't risk allowing them to be opened and setup without being sure of getting paid.
On the other hand, my client (the federal institution) has a policy of paying on delivery due to the uniqueness of the Nigerian business environment. Though I've explained that since the equipment need to be unsealed and setup prior to delivery, it would be impossible to accept their terms. They have however insisted.
This is the problem.
Supplier (a U.S. Tech Firm) won't release without payment as they are afraid that once their goods are unsealed and setup they risk huge losses if the insitution fails to honor its payment obligation.
Client won't pay in advance as they have a laid down policy against such due to past negative experiences with suppliers.

I spoke to my bankers and they advised using a third party such as themselves to provide comfort to all parties. My bank suggested they do me a BG (Bank Guarantee) to my client assuring them that they will get their order if they go ahead and pay me and the client has accepted that.
Hence essentially, if the bank issues the BG on my behalf, client then pays in full prior to delivery and funds are available to acquire from supplier via full payment. Equipment are then setup and delivered to the client and transaction is complete.

However, the issue now is that the bank is asking for collateral to the tune of the amount to be paid by the client in order to issue the BG and because of the volume of the transaction, I cannot provide the cash reserve needed as collat.

I'm looking therefore for a third party who will be willing to invest benchmark funding that will yield a profit in a 1 month maximum period. If anyone has tips on how I could do this differently, do tell.
I've reviewed using APG, LPO etc but the cost will eat deep into my margins. Hence BG is the cheapest for me and will cost just 1% of transaction worth.

To give you an idea, the institution is ordering over 2000 kits and each kit costs about 300k. However, I'm considering breaking into batches of 100.
Essentially, I'm offering 7% yield on a 1 month investment of 30 million.

Urgent tips, feedback etc appreciated. As you've guessed, I'm an SME trying to make it in the harsh Nigerian business environment.

YoungExec:
Kindly note that I seek ideas:
I'm in the middle of a deal with a federal institution to supply ICT equipment. Due to the nature of the transaction, these equipment have to be setup prior to delivery and the supplier insists that they must get full payment before they release the kits as they can't risk allowing them to be opened and setup without being sure of getting paid.
On the other hand, my client (the federal institution) has a policy of paying on delivery due to the uniqueness of the Nigerian business environment. Though I've explained that since the equipment need to be unsealed and setup prior to delivery, it would be impossible to accept their terms. They have however insisted.
This is the problem.
Supplier (a U.S. Tech Firm) won't release without payment as they are afraid that once their goods are unsealed and setup they risk huge losses if the insitution fails to honor its payment obligation.
Client won't pay in advance as they have a laid down policy against such due to past negative experiences with suppliers.

I spoke to my bankers and they advised using a third party such as themselves to provide comfort to all parties. My bank suggested they do me a BG (Bank Guarantee) to my client assuring them that they will get their order if they go ahead and pay me and the client has accepted that.
Hence essentially, if the bank issues the BG on my behalf, client then pays in full prior to delivery and funds are available to acquire from supplier via full payment. Equipment are then setup and delivered to the client and transaction is complete.

However, the issue now is that the bank is asking for collateral to the tune of the amount to be paid by the client in order to issue the BG and because of the volume of the transaction, I cannot provide the cash reserve needed as collat.

I'm looking therefore for a third party who will be willing to invest benchmark funding that will yield a profit in a 1 month maximum period. If anyone has tips on how I could do this differently, do tell.
I've reviewed using APG, LPO etc but the cost will eat deep into my margins. Hence BG is the cheapest for me and will cost just 1% of transaction worth.

To give you an idea, the institution is ordering over 2000 kits and each kit costs about 300k. However, I'm considering breaking into batches of 100.
Essentially, I'm offering 7% yield on a 1 month investment of 30 million.

Urgent tips, feedback etc appreciated. As you've guessed, I'm an SME trying to make it in the harsh Nigerian business environment.

Instead of using a BG, what's the possibility and cost of using your lawyers? Come up with a document that each party would sign.

I suggested this to my client today and was told in confidence that the Vice Chancellor will not be willing to pursue that path as they are used to dealing with vendors who have supplied much more expensive items who followed the policy.

In such a situation, ask yourself pertinent questions such as how long have you known these suppliers? Is this the first time buying from them?

Do they have a website? Read their reviews. Since compromise is not coming from the school, get a lawyer and tackle the supplier.

The supplier is Apple Inc. the school wants vast quanitities of Apple MacBooks and stuff. Apple has told me that they do not have a problem delivering the school's needs to me. However, they won't allow the kits to be unsealed and configured if they are not paid for first.
They've said that if the school is going to pay on delivery, then the best they can do is allow me deliver their devices in their sealed packs. Unsealing will only happen when paid for.
On the other hand, the school is paying for configured devices not sealed ones so they will only pay when they confirm that their requested configuration is in each device.

Tough situation. If you are positive in both sides, get bank collateral

2000 kits and each kit costs N300K? Essentially N600Mil? Huge investment.

For starters, to help establish trust and confidence, try ordering in much smaller quantities first.

Exactly, I've scaled down to groups of 105 worth about 30mil each